Tories demand Reeves rule out investment tax hikes

Shadow chancellor Mel Stride has called on the Government to rule out tax hikes on investors (PA) James Manning

The Conservatives are demanding Chancellor Rachel Reeves "urgently rule out" raising shares taxes in the autumn budget, claiming that leaving investors "in limbo" will damage the economy. The Tories warn that scrapping the £500 dividend allowance will drag an estimated 5.22 million more people into paying investment levies.

The party is seeking to pile pressure on ministers after a memo sent by Angela Rayner to Reeves was leaked to the press. In the document, the Deputy Prime Minister suggested a series of tax hikes to raise revenue.

Rayner's proposed tax changes

Rayner proposed removing the dividend allowance to raise around £325 million a year in revenue, according to the Telegraph. The memo also suggested axing inheritance tax relief for AIM shares and increasing dividend tax rates.

Shadow chancellor Mel Stride said: "The Government need to urgently rule out these tax hikes on savers and investors before speculation causes further economic harm. Labour don't understand how business works and how to create growth."

Economic pressures mount

The Government's U-turns over welfare reform and winter fuel payments have left the Chancellor with a multibillion-pound black hole to fill. This has fuelled speculation that Reeves will seek to raise revenue through tax hikes in her upcoming budget.

The Tories' claim that axing the dividend allowance would affect 5.22 million people appears based on an assumption that at least 8.82 million people in the UK hold dividend-paying shares. Some 3.6 million are already subject to dividend tax, according to data obtained by investment platform AJ Bell through a Freedom of Information request.

Chancellor refuses to rule out hikes

Reeves last year said she would not be "coming back with more borrowing or more taxes" after her first budget. However, she has since refused to rule out raising specific levies, saying it would be "irresponsible" to do so.

A Labour Party spokesperson hit back at Conservative criticism, saying: "The Conservatives have some brass neck. They've still not apologised for the damage caused by the Liz Truss mini-Budget, nor the £22 billion black hole they left - which hammered firms and families across the country."

Government defends economic record

The spokesperson added that Labour is "doing more to support business than the Tories ever could". The Government has already delivered three historic trade deals and four interest rate cuts to reduce costs and put money back in people's pockets, they said.

(PA/London) Note: This article has been edited with the help of Artificial Intelligence.